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Brussels: The European Union (EU), opening up a new transatlantic trade spat, will investigate whether soaring imports of US biodiesel break global trade rules because of subsidies, the EU's executive Commission said on Friday.
"We have always said that the EU will not tolerate unfair trade practices and will pursue vigorously any well-founded complaint," said Peter Power, a spokesman for EU Trade Commissioner Peter Mandelson.
"The Commission will leave no stone unturned in this investigation and will act in accordance with its findings."
In April, EU biodiesel producers requested the Commission impose duties on imports from the US and yesterday it said there was enough evidence to warrant anti-subsidy and anti-dumping probes.
European producers say their US rivals benefit from generous subsidies when they blend biodiesel with small amounts of mineral diesel in the US, creating unfair competition that has put much of EU industry out of business.
US imports into the EU, which are larger than from any other country, increased from about 7,000 tonnes in 2005 to about one million tonnes in 2007.
American reaction
US producers deny that their exports are the main reason behind the problems of European producers which have also been caused by new biodiesel taxes in Germany.
The American industry has suggested it might hit back with action of its own, saying EU biodiesel fuel specifications are discriminatory against imports.
Brussels now has until March 13, 2009, to decide whether US imports need to be hit with duties on a provisional, six-month basis, and after a further six months it could extend them definitively, usually meaning for five years. Any decision by the Commission to impose duties would have to be backed by EU member states.
The European Biodiesel Board, representing EU producers, pointed to US federal excise and income tax credits and a programme of grants to finance increased capacity, plus state-level subsidy programmes, as evidence in the anti-subsidy case, the Commission said.
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